We recently did a presentation for a company where many of them had managed to secure H1B visas via a lottery system. For a while, the US had capped these visas, but the lottery has been re-opened again. For companies getting ready to send their team members to the US, here are some taxation aspects to know.
It’s important to know what your residential status will be, and how that will affect your taxation.
For the first year, your status will either be NRI or Resident in the year of departure depending on the number of days in India. From the second year, your status will be NRI and only Indian sources will be taxed in India.
You will be considered a Resident Alien, and you’ll need to fill out forms accordingly (Form 1040). Worldwide income will be taxable in the USA and credits for taxes paid in India will be available.
The US has only recently opened up the lottery for H1B visas, after capping it for a few years. For Indians going to the US to work, and for companies with employees moving to the US for work, some of these aspects that impact taxes are good to know in advance so you can be prepared.
For non-residents, FEMA is effective from the date you leave India for employment and you are not looking at coming back with certainty.
Why is this important?
Access to funding sources on H1B: possibilities and limitations
